Observation Units. All Good. Right?

Would you like to read about some good policy, but bad execution? Browse on.

On the physician side of the ledger, we trust that observation units, i.e., geographic weigh stations to determine fitness of admission or discharge, are a good thing. Earlier discharge, focused resource use, possibly less exposure to hospital badness—all winning strategies to improve efficiency. What is the problem then? From todays WSJ:

The issue arises when a Medicare beneficiary who comes to a hospital is placed in a status called “observation care.” This is supposed to mean that patient is being watched while doctors decide if she can be discharged, or if she is ill enough to be admitted as a true inpatient. Observation is typically supposed to last 48 hours or less.

The number of observation hours grew to around 36 million in 2009, from 23 million in 2006, according to the Medicare Payment Advisory Commission. The commission also saw a growing number of stays lasting 48 hours or longer between 2006 and 2008.

The problem for Medicare beneficiaries is that observation services can result in unexpected expenses. They are considered outpatient care—even if the patient is in the hospital for several days. That means the visit isn’t included under Medicare Part A, which covers the total cost of hospital services after a deductible. Instead, the patient owes copayments for services under Medicare Part B, which covers outpatient care and doctors’ work. (Beneficiaries who have Medicare Advantage coverage pay according to their particular plan’s rules.)

In the evolving milieu of shared savings or rewards for rapid patient turnaround, let us review the scorecard: The hospital? Win. The doctors? Win. The insurance company? Win. Medicare? Win. Who is left? Oh yeah, the patient. They get screwed, and big time.

A visit to the hospital, with all the technology and goodies to ramp up the copays and coinsurance—and a generous bill to greet them, perhaps unknowingly, several weeks later. Not good policy, especially in an imbalanced system that fails to weigh escalating costs of care and the declining ability for most seniors to cope with out of pocket expenses.

I am not advocating the status quo, and I sure as heck am not looking to throw good money after bad—not in the financial peril we are in today. What I am endorsing is a pragmatic relook at a process that will surely anger and hit beneficiaries hard. That’s what doctors and professional societies do. Dumb policy is just that. Dumb. We have a voice, and we need to use it.